One of the common arguments against letting the Bush-era tax cuts expire is that it wouldn’t help as the increases would not address the deficit. These people use information such as provided from the Heritage Foundation piece there to support their argument, failing to notice that the article uses faulty data and narrowly selected information to push a false refrain. They also used an old budget estimate to determine the deficit, one not reflecting revisions to the budget. They picked an end result and worked their way backwards to get there. Bad science.
To counter that, Paul Buchheit wrote a piece for Common Dreams where he took some basic math and tackled the problem. In simple terms, he discussed tax avoidance, tax havens, the estate tax, payroll tax improvements, and even a financial transaction tax. Good science, with facts to back it up.
It is not very detailed, only giving a basic overview of several different concepts. In exploring the direct taxes on the wealthy, one can find far more to discuss.
With the IRS finding that 17 percent of taxes are unpaid, with the total from that at ~$450 billion, one can see issues with the Heritage article already piling up. This is with the existing Bush tax code, not even counting any additional revenues from a return to the Clinton-era tax system. The IRS report further elaborated that the lions share of this came from the under-reporting of income, an estimated $376 billion. This would be things such as the Management Fee Conversion tax avoidance scam, an illegal method of reporting income as capital gains, popular among those in charge of financial firms, such as Bain Capital. The report also said that a large percent of this was due to lax enforcement and the relaxing of paperwork required, both policies of the Bush administration.
So, $450 billion *just* in tax shortfalls, that is money owed which was not collected. That is almost half of what our current deficit is. And that is just for individuals, as corporations also skip out on their taxes. The current average corporate tax rate has been hovering around 10% for the past three years. By the shifting of losses from year to year, and the use of offshore banking and front subsidiaries, a corporation can easily skip out on most, if not all, of its tax bill. The total estimates for this vary, but conservative estimates put it at $222 billion. That, combined with the above avoidance schemes gives us half of the national deficit right there, all taken care of.
Once you step into the murky world of off short tax havens and shelters, an even darker picture emerges, with the US losing at least $337 billion for these tax schemes. With other reports putting the total offshore value even higher, the total could be well be in excess of half a trillion.
Right there, money the US left on the table due to lax enforcement of our regulations and the use of illegal tax shelters would balance the budget without a single cut. If we restored the Clinton era tax code as well we would be looking not at a $1 trillion deficit for this year, but from CBO estimates we would be looking at a surplus of over $300 billion dollars next year alone.
If the US were to engage in an old tactic, of using taxes in a carrot and stick approach to punish bad behavior, such as high volume trading through a trade surcharge tax, even more revenue would be earned. By putting a half percentage point tax on each trade, you would raise an estimated $1 trillion per year. It would also slow down the risky high-volume trading market, which historically has destabilized the markets in a moments notice. By engaging in risky behavior, companies would be punished through having the tax applied over and over again, while if one engages in responsible, long term investing, the tax would be little more than a rounding error.
The paying off of the debt is possible not just within our lifetimes, but within two presidential terms. The Republicans however refuse to discuss it, and continue their tactics of wild deficit spending and running up the national debt. Instead they continue their failed policy of tax cuts for the rich along with punishing the poor.
The Republican Party has embraced a lie, a bad lie which serves only to destroy this great nation of ours. If we let them back into power, they will continue to push their toxic program until this nation is completely destroyed.